Dow Futures Up 280 Points – J&J Vaccine Approval Helps

U.S. stocks are seen opening sharply higher Monday, boosted by more positive Covid vaccine news, progress in the U.S. stimulus package and Treasury yields dropping from last week’s highs.

At 7 AM ET (1200 GMT), the Dow Futures contract was up 280 points, or 0.9%, S&P 500 Futures traded 36 points, or 1%, higher, and Nasdaq 100 Futures climbed 145 points, or 1.1%.

Johnson & Johnson’s Covid-19 vaccine was authorized for use in the United States over the weekend – the third approved drug, following ones from Pfizer/BioNTech, and Moderna.

However, the two earlier vaccines require two doses. This is a single-dose application, could start being used as early as Tuesday, and is likely to dramatically speed up the number of Americans vaccinated in the coming weeks, bringing the full reopening of the economy nearer.

Adding to the optimism was the passage of President Biden’s proposed $1.9 trillion Covid relief bill through the House of Representatives. The Senate will now consider the legislation this week.

Wall Street suffered its worst week in four months last week, with the major indices closing near one-month lows. This selloff was prompted by bond yields climbing sharply, suggesting markets were starting to factor in an earlier rate hike from the Federal Reserve.

However, bond yields have stabilized Monday, with the benchmark 10-year Treasury yield currently trading around 1.43%, well off the 1.60% level that it briefly touched last week.

Meanwhile, earnings season is wrapping up, but retailers will still be reporting, with Target, Kohl’s and Nordstrom due to publish figures on Tuesday, followed by Costco on Thursday. As far as Monday is concerned, numbers are due from insurer Lemonade and video communications company Zoom, both after the close.

The economic data slate Monday includes February’s final read for Markit’s U.S. manufacturing purchasing managers’ index and the more widely-followed survey from the Institute of Supply Management. However, the main focus will be on Friday’s nonfarm payrolls release, with the employment market seen as the Federal Reserve’s key gauge of growth.

Oil prices pushed higher Monday, with traders expecting future demand growth on the back of the U.S. stimulus package passing its latest hurdle.

On the supply side, the Organization of the Petroleum Exporting Countries and their allies including Russia, a group known as OPEC+, is due to meet later this week. These top producers will likely discuss the option of allowing significantly more oil into the market given the recent price rises.

U.S. crude futures traded 1% higher at $62.12 a barrel, while the international benchmark Brent contract rose 1% to $65.08.

Elsewhere, gold futures rose 0.9% to $1,743.45/oz, while EUR/USD traded 0.3% lower at 1.2043.

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